Latin America Solar Market 2016

Date: 06/22Viewed (2825)

GTM Research just released the latest edition of the Latin America PV Playbook, which tracks solar projects, policies and market developments across South America, Central America, Mexico and the Caribbean. According to the report, the region is on pace to install 2.2 gigawatts of PV in 2016, up 55 percent over last year’s 1.4 gigawatts.

Chile currently is the leading
market in the region, with a cumulative 1.4 gigawatts installed so far, eight
times more than that in Mexico, Latin America’s No. 2 market. However, this
will soon change. GTM Research expects both Mexico and Brazil to install more
PV than Chile in 2017 and eventually to outdo it in cumulative installations by
2018 if downside risks hold back.

All three markets are
benefiting from utility-scale auctions in which solar is out-competing other
clean technologies. In recent auctions, solar won 20 percent of the offered
capacity in Chile, 63 percent in Brazil, 40 percent in Peru and 72 percent in
Mexico.

Mexico in particular is now home to the lowest PPA prices ever recorded, thanks to its latest auction. Driven in large part by these auctions, GTM Research forecasts that Mexico will install 2 gigawatts in 2017, accounting for nearly half of the installations in the entire Latin America solar market next year.

Brazil, a small solar market
today, has a massive 3-gigawatt project pipeline. The report notes that few
installations have come on-line to date.

“Projects are struggling to construct because
of a lack of affordable financing,” said Mohit Anand, senior solar analyst and
lead author of the report. “An economic downturn coupled with significant
political risk has made it impossible to access debt globally. On the other
hand, low-cost financing from the Brazilian development bank BNDES is available
only by using domestically manufacturing modules, which again are hard to
procure because of the dearth of local manufacturing.”

Project
deadlines loom in 2016 and 2017, and several could be delayed. But attractive
PPA prices in the more recent auctions are attracting international investors
looking to buy out struggling projects and equity-finance their construction.